It's sort of like a REIT's version of an options plan, Pat Foye, spokesman for AIMCO tells GlobeSt.com. "But it's not an option program, because an option is a freebie," Foye explains. "If you have options, and your stock goes up, you're a winner. Under this program, the executives must write a check. If the stock does not perform he loses all of the money. But if he exceeds stated thresholds, he gets more units. The units are sort of a proxy for common stock."
Under the current plan, senior management can contribute up to $2 million. The new plan may open doors for contributions up to $4 million, although the final amount remains undetermined at this point.
"Other REITs have similar plans, but frankly, what is distinguishes this from the rest is the upfront investment," Foye tells GlobeSt.com. "They put their money at risk, so their interests are strongly aligned with the interests of shareholders."
The modified program, which begins Jan. 1, must be ratified at the AIMCO annual meeting on April 19. The contribution plan began nearly three years ago. AIMCO isranked fourth out of 110 REITs in total return to stockholders since Jan. 1, 1998. In addition, the company's return has surpassed the Morgan Stanley Dean Witter REIT Index by 56% during the same period.
AIMCO's shareholder return must exceed a 30% minimum for three years with the program. As of Oct. 31, only 17 of 110 REITs have achieved this minimum return.AIMCO and its subsidiaries operate about 1,740 properties, including about 330,000 apartment units, and serves approximately one million residents. AIMCO's properties are located in 48 states, the District of Columbia and Puerto Rico.
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